All Forum Posts by: Jim Jones

Ok thanks.  I'm just trying to educate myself on the basic strategy before sitting down with a tax professional.  

If I own a $1M property as an STR and manage it myself. I have no other w2 job, but my significant other has a w2 job. If I qualify as a REPS and do a cost seg study on the property to accelerate depreciation, can I generate significant tax savings due to depreciation expenses that can be used to offset my significant other's w2 income?

Additionally, can I replicate this yearly (by possibly doing a 1031 exchange) and getting a new property?  

I'm just trying to understand if this scenario is possible.   

Thanks for the response.  So just to clarify.

- My goal is 200K tax savings annually

- It sounds like 1031 exchange isn't unnecessary as I could just buy a property, cost seg it, get the tax savings, then sell it, as I'm looking to buy another.  if i do that 1 per year, I probably would not have any meaningful gain/appreciation anyhow.  So the 1031 is not needed.  Does that sound correct?

- Also, sounds like you'd recommend going with short-term rental as REPS requirement isn't necessary, correct?  

- If I purchase a $1M STR property can get $200K in tax savings out of that annually?

Thanks.

I'm looking into qualifying as a real estate professional, as I currently don't have a w2 job. I would like to purchase a property, manage it and use losses to offset my spouse's high w2 income. I have the basic concept and understand the rules to qualify as a REP, but am wondering if the following blueprint is possible.

1. 1) Purchase a multi-family or vacation property for $1M
2. 2) Do a cost segregation study to qualify for accelerated depreciation to incur losses of say $200K
3. 3) Manage property throughout the year to qualify as REP
4. 4) Use $200K loss, to deduct from my spouse's w2 income on our joint return
5. 5) Sell property using a 1031 exchange and repeat the process doing 1 property per year

Is this doable? I know I need to talk to a tax pro, but conceptually is this possible?